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Christian Baude writes:
> On Mon, 2 Nov 1998 19:12:31 -0500 (EST), you wrote:
> >According to the SEC, yes. Your broker may not allow it, however.
> >By "trading", however, you may buy puts and calls, and sell an
> >existing position. You may not sell to open, other than covered call
> >writes, as that would require margin.
> Ummm... - margin is money you do not have, and that is a no no, as
> IRA(s) cannot be used as collateral or for loans. I may have to call
> my broker on this one. 'Cause I seem to recall I wanted to do
> something similar at a later time and the broker would not allow it
> (writing a put). I do seem to recall in my conversations, that the
> brokerage house had had some problems, and could not lock in the cash,
> pending the expiration of the put... I also seem to recall, that one
> of the reasons, is that they would have to "escrow" the funds in a
> non-interest bearing account, and it was an accounting (read computer
> software) nightmare.
>
> SOoooo.... they probably could do it, but do not have the proper tools
> to handle such a small sector of their business.
I'd wager that you are spot on with that assessment.
> We must never forget that we are a pool to be milked by the larger
> powers. As such, the laws favor the power, and not the pool. Thus if
> the IRS/SEC now forbids this transaction, I doubt it was based on a
> "social" motive.
I can't comment on that, but I'd bet more than 1 401(k)/IRA would no
longer be around if it weren't for the no margin rule.
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